Dear Chip and JoJo: I love you dearly. Thank you for inspiring and empowering all Americans to chase their dreams by buying 100 year old farmhouses, and turning them into their dream homes with little to no money. All of us NORMAL BROKE people think we can do this when in reality, WE CANT. So POO ON YOU! There aren’t homes that cost $100k that can be flipped with $50k. Period. $50k gets you some electrical and maybe some plumbing, then you’re out of money, with a shotty old house and no walls.
So we’ve decided to throw in the towel… Approximately 10 times now… And our relentless realtor (who is the bomb.com) refuses to let us give up in this process. Every step of this process has been difficult. Oh-except for making an offer and getting our hopes up (read about that Here). Of course that part was easy peasy.
One of the biggest road blocks we hit was FINANCING. Who wants to give 2 young dummies lots of money to pour into a broken delapidated puddle of sticks? NO ONE!
Last Tuesday, Zack and I BOTH showered, I put normal clothes on, and we went to the bank in hopes of getting them to see our dream, and give us money to make it happen. We were extremely disappointed to find out that most banks require 20% down for construction loans… SAY WHAT. So here’s the breakdown (just to be completely transparent)
Purchase price $98k
Construction costs: $72k
Total loan amount: $170k
Required down payment: $34k
The “normal” way to do this is get a mortgage for the purchase price + a construction loan.. Fix up the house then consolidate the loans into one big crappy ARM loan. The reality is, we don’t have $34k in cold hard cash to put towards a down payment.
DONE. we walked away and said “oh well, we tried and it was fun to dream about. Guess we will rent for the rest.if.our.lives”
Then our realtor called.
He said we need something called a 203k loan. It’s an FHA loan for:
1st time homebuyers
Homes that need renovations
Requires only 3.5% down
BOOM. We were back in the game. By Tuesday night, we (our realtor) found someone who offered the 203k loan (only 3 people on NWA offer this loan that we know of) We filled out the application and were pre approved by MIDNIGHT Tuesday night.
Week 2 (and a half) has been the biggest roller coaster ride. We have gotten 1000 “no’s” and a few “YES’S” and thankfully, the YES’S have kept us in the game.
My advise to anyone who is looking to buy a fixer upper: find people who will be ON YOUR TEAM. You will meet many people along the way (lenders, contractors, random Debbie downers) who will make you think this isn’t possible. They will tell you that there is absolutely no way.. And they will make you want to throw in the towel. Don’t.
Think to yourself, “what would Chip do?” Roll up your sleeves, find your JoJo (or cheerleaders) and just keep swimming.
Next step: FIND A DANG CONTRACTOR. So far we’ve found 2 types:
1. expensive but professional
2.the typical good ole boy… “huntin’ season is coming up so this project may take forever” contractor that is RIGHT IN OUR PRICE RANGE
This should be fun.